FCA urges asset management firms to prepare for end of LIBOR

Maria Nikolova

Asset management firms should consider not making any new investments in GBP LIBOR based cash products maturing beyond 2021 by the end of the third quarter of 2020.

The UK Financial Conduct Authority (FCA) has earlier today sent a “Dear CEO” letter to asset management firms advising them to prepare now for the end of LIBOR.

The FCA and the Bank of England encourage market makers to change the market convention for sterling interest rate swaps from LIBOR to SONIA and have identified March 2, 2020 as an appropriate date for this change to happen. As asset management firms are users of swaps on behalf of clients, this target implies asset management firms should now consider switching from LIBOR swaps to SONIA swaps for new positions where possible, the FCA explains.

Further, one of the RFR Working Group’s priorities is to ‘Cease issuance of GBP LIBOR-based cash products maturing beyond 2021 by end Q3 2020.’ Asset management firms are significant investors on behalf of clients in cash products (such as bonds, securitisations, structured products, loans). Therefore, this target suggests asset management firms should consider not making any new investments in GBP LIBOR based cash products maturing beyond 2021 by the end of the third quarter of 2020.

Asset management firms also often operate funds and other products which have benchmarks or performance fees linked to LIBOR. Hence, the FCA thinks this target of end Q3 2020 is sensible for firms to consider when planning to cease launching new products with benchmarks or performance fees linked to LIBOR.

The FCA advises asset management firms to prepare a transition plan. The plan should:

  • carefully quantify all investments, operations and activities with LIBOR exposures and dependencies for a firm and its clients;
  • consider both how the firm will remove or ameliorate existing exposures and dependencies in a timely manner and avoid creating new ones, and
  • include a strategy for keeping clients appropriately informed of such changes as they are developed and implemented.

Read this next


Groundbreaking Innovations in BlockDAG’s Keynote 2 Drive Over 1120% Increase; Toncoin & Celestia Prices Rise

Explore BlockDAG’s Keynote 2, detailing the cutting-edge technical advancements that led to a significant presale boom. Discover how these innovations have driven BlockDAG’s success, and get the latest updates on Celestia and Toncoin prices.


BlockDAG X1 Beta App Pioneers in Crypto Mining Amidst Ethereum vs Solana Rivalry and XRP Price Increase

Dive into the details of BlockDAG’s X1 beta app’s global tech presence in Shibuya, Las Vegas, and Piccadilly Circus and its pre-sale triumph during a spike in Ethereum, Solana, and XRP values.


BlockDAG Hits $50.4M with Active Dev Release & Community Engagement; Binance Coin Price Drops and JasmyCoin Rallies

Explore how BlockDAG bolsters its reputation through a steady stream of Development releases. Get insights on Binance Coin price trends and the recent Jasmy Coin rally.

Crypto Insider

5 Upcoming Crypto for 10x Gains: How $1000 Can Become $10,000

Consider a situation where a $1000 investment may grow to a whopping $10,000. Astute Bitcoin investors have experienced this as a reality rather than a fantasy.

Retail FX

Weekly Roundup: eToro links up with Elon Musk, US crackdown on Russian FX

Let’s take a look back at top stories that dominated the financial markets in our Weekly Round coverage. This week’s digest takes a deep dive into the most recent events and trends within the Forex, Fintech, and cryptocurrency.


Must-Watch Top 5 Crypto Picks for Q2 2024 Featuring BlockDAG, Toncoin, Solana and More

Dive into BlockDAG’s meteoric rise and explore other promising altcoins like Pepe, Toncoin, Solana, and Render for superior returns.

Retail FX

Clone of Admiral Markets draws FCA attention

The United Kingdom’s financial markets watchdog today unmasked another fraudulent entity, this time bringing to light a clone firm that has been posing as FCA-‎authorised brand, Admiral Markets UK Ltd.

Digital Assets

Gemini Earn users to recover $2.18 billion in crypto payouts

Cryptocurrency exchange Gemini has agreed to pay $50 million worth of digital assets to investors in its Gemini Earn program as part of a settlement with the New York Attorney General (NYAG), announced on Friday.

Fundamental Analysis, Market News, Tech and Fundamental

Global FX Market Summary: British Pound (GBP) Weakness, US Inflation, Euro, USD June 14 ,2024

British Pound weakens due to lower inflation expectations, potential policy changes from Reform Party, and broader economic concerns.